Water exists in the mind as the emotional nature, our ability to connect with the external world, which is the seeking of consciousness to take form. This includes our capacity to gather sensory impressions and respond to them through like, dislike, attraction, repulsion, fear and desires.
Water is the formative aspect of mind which allows us to imagine, plan and construct our reality. It is the basis of will, motivation and action in the external world. Through this outer mind & its expressive capacity, we function in the world and feel ourselves to be part of an outer reality. It is what we usually know as mind and contains our ordinary emotions, thoughts and sensations.
Moon position in Vedic chart governs the emotional stability of any native. If the moon is in very bad dignity, then emotional stability of Native is always in question. E.g. Kemdrum yog, Vish-Yog are some examples, where we find very difficulty in dealing with such individuals at emotional aspect.